Sub Prime Lenders
Your credit history is a record of any previous loans or credit agreements you may have arranged in the past. Any missed payments, CCJs, arrears and previous mortgage applications are recorded in this file.
Having a clean credit record is a good recommendation for lenders - the equivalent to a good CV for borrowers. If you have repaid any previous loans on time, with no difficulties, you will have a clean reference for any future applications.
However, blemishes on your credit record, caused by factors such as mortgage or rent arrears, as well as County Court Judgements (CCJs), defaults, decrees and bankruptcy, will discourage lenders from loaning you large sums of money, resulting in many refused applications and a lot of frustration.
If you believe you may have bad credit it is important you do not start applying to multiple lenders as this will further damage your credit history. Instead it is worth considering lenders who specialise in the bad credit mortgage market, referred to as sub prime lenders.
Mortgage lenders may also turn you down if you have changed address many times or if you are an entrepreneur without 3 years worth of audited accounts. Self-employed borrowers may have to apply for a mortgage via sub prime lenders but may also apply for self-certificate mortgages, meaning they declare their earnings without having a set guaranteed salary.
It is estimated that one in four British people would not qualify for a standard mortgage from a high street lender. This means they require sub prime lenders in order to acquire a mortgage. Fortunately there are many sub prime lenders across the UK and also some mainstream lenders who consider lending to people with bad credit history.